Compare & Contrast, Part II, or Why Hayek Is Right (Again)

On Tuesday, John and Paul discussed what is to be made of the contrast between the sophisticated and highly effective data analysis and digital execution of the Obama campaign in 2012, and the utter technological failure of the Obamacare health exchanges that came on and crashed last week. Why didn’t Obama hire the same tech-savvy people who designed his campaign’s digital effort to design Obamacare? Did he somehow hire Romney’s Project Orca team by mistake?

John and Paul are surely correct that Obama is indifferent to the practical management of government: here merely wants to rule, and doesn’t much care about the details. But Paul is right that, as I’d put it, comparing the digital campaign to designing Obamacare’s online exchanges is to compare apples to oranges.

I wrote a bit here back in February about the Obama campaign’s digital operation, as did Scott before that. (So hey—the entire Power Line team is on to this story!) What I left out is that the Obama campaign’s digital effort was not really new conceptually; it was merely an online version of a political organizing technique that has been around for several decades now in a more cumbersome form known as a “network analysis.”

This was a technique first pioneered by political operatives on the left based on social science theories of the reciprocal influence of “power elites” sketched out by people like C. Wright Mills back in the 1950s. Essentially it represents figuring out the informal networks of social and political influence in a local area (but some efforts were statewide in scope in the 1970s), so that you can target your political efforts at the key individuals—or “nodes”—that can leverage a political effort more quietly and indirectly than you can through expensive and untargeted paid ads, or inefficient door-to-door canvassing. Put more simply, a network analysis aims to identify key individuals or civic organizations that sway their neighbors and fellow citizens, and then target them to help you get out your message and win your fight. Labor unions in particular used network analyses in unionization efforts in the Midwest back in the 1970s.

The only thing new about the Obama 2012 effort was the ability to do the “data mining” more efficiently and cheaply and on a much much larger scale. In the old days, the network analysis efforts I studied all required cumbersome and relatively expensive survey work, usually by telephone but also by written questionnaires (sometimes mailed) that all had to be collated and then analyzed with statistical algorithms the old-fashioned way with a calculator. Today, FaceBook and a laptop do it all for you. As I say, the left has always been better at using this technique in their organizing and campaign efforts than the right, which is one reason why the Romney campaign so badly lagged the Democrats last year.

Setting up the Obamacare exchanges is in a whole different league. By coincidence, I’m taking up Hayek once again in class this week, and beginning with Hayek’s central insight from his seminal 1944 essay “The Use of Knowledge in Society,” in which he essentially explains (or predicts) the unsolvable defect of any policy that depends on centralized command of a complex marketplace like health care. Here, once again, is the key paragraph:

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.

To paraphrase, the fundamental defect of Obamacare is that it is attempting to command and allocate health care information “in concentrated or integrated form.” This isn’t going to work, no matter how many fancy FaceBook and Google software geniuses you hire. And if you do figure out how to get it “working” temporarily, changes in the marketplace will quickly render the scheme obsolete and inefficient.

UPDATE: Jan Crawford of CBS News gives a straight up report on this problem: